On February 22, 2023, the United States Supreme Court decided Helix Energy Solutions Group, Inc. v. Hewitt, a case that clarifies the definition of the “salary basis” test, particularly for highly compensated employees paid on a daily basis.
The case arose from a dispute between Michael Hewitt and his employer, Helix Energy Solutions Group, Inc. Hewitt worked as a drilling manager for Helix on an offshore oil rig. He was paid on a daily basis, and he often worked more than 40 hours per week. Hewitt sued Helix for overtime pay under the Fair Labor Standards Act (FLSA).
The FLSA requires employers to pay their employees a minimum wage and overtime pay for hours worked in excess of 40 hours per week. However, the FLSA also exempts certain employees from these requirements, including “bona fide executive, administrative, and professional employees.”
One of the requirements for being exempt as a bona fide executive is that the employee must be paid on a “salary basis.” The FLSA defines “salary basis” as “a regular salary payment at least equal to the minimum weekly salary specified in section 541.602 of this part which is paid on a weekly, biweekly, semimonthly, or monthly basis.”
In Hewitt, the Supreme Court held that the HCE exemption can apply to employees paid on a daily basis, but only if the employees receive at least the minimum weekly salary amount on a salary or fee basis. In Hewitt's case, he did not receive at least the minimum weekly salary amount on a salary or fee basis, so he was not exempt from overtime pay.
The Hewitt decision is a significant victory for workers who are paid on a daily basis. It clarifies that these workers may still be entitled to overtime pay, even if they are paid a high salary. The decision is also a setback for employers who have been misclassifying their employees as exempt from overtime pay.
The Hewitt decision is likely to have a significant impact on employers who have employees who are paid on a daily basis. Employers should review their payroll practices to ensure that they are not misclassifying their employees as exempt from overtime pay. Employers who are found to be misclassifying their employees may be liable for back pay and other damages.
Comments